State Oil and Gas Regulators Are Spread Too Thin to Do Their Jobs
ProPublica
30 December 2009
By Abrahm Lustgarten,
Larry Parrish knew something was wrong as soon as he wheeled his
state-owned pickup off the West Virginia highway and onto the rocky
field where the natural gas well was supposed to be. Oak trees 18
inches in diameter looked dead as boards, and brush as brown as
kindling stretched across a piece of farmland the size of a football
field.
The dead zone in this otherwise lush mountain country meant one thing
to Parrish: Gas drillers had been illegally dumping briny water mixed
with chemicals, and the waste had killed everything from the rusty well
head all the way downhill into a creek. The worst part, Parrish said,
was that the devastation could have been avoided if the West Virginia
Department of Environmental Protection had had enough inspectors to
make sure the state's growing number of gas wells were checked
regularly.
"It was sad -- sickening," said Parrish, a former field inspector for
the DEP's office of oil and gas. "It probably had been years since
anybody had been out there."
West Virginia has added a handful of people to oversee its growing
drilling industry since Parrish retired in 2006, but other than that
not much has changed. For the state's 17 inspectors to visit West
Virginia's 55,222 wells once a year, they would have to inspect nine
wells a day, every day of the year -- no weekends, no vacations.
"We are doing what we can do," said Gene Smith, a regulatory compliance
manager for West Virginia. "But that still leaves thousands of wells
that are not inspected yearly or even every decade."
Regulators in other states are equally overwhelmed as they try to keep
tabs on the nation's nearly one million active oil and gas wells, a
number that's likely to climb as the feverish growth in natural gas
exploration continues.
A ProPublica investigation comparing the rapid expansion of drilling in
22 states with staffing levels at the agencies charged with policing
the wells found that the nation's capacity to enforce its environmental
protections is weakening. The picture strikes at the heart of the
industry's long-standing argument that state regulatory agencies will
be more effective industry watchdogs than the federal government.
Search ProPublica's database to find how
many gas regulators work in your state.
http://projects.propublica.org/gas-drilling-regulatory-staffing/
While the number of new oil and gas wells being drilled in the 22
states each year has jumped 45 percent since 2004, most of the states
have added only a few regulators. Those with the widest gaps are Texas,
which is already grappling with the most drilling, and New York, which
is expected to soon have the fastest rate of growth.
As regulators' workloads have grown, enforcement actions -- the number
of times violations were recorded and acted on -- have dropped in many
states, often by more than half. That could mean companies are
complying with the law -- or that inspectors aren't checking the wells.
"You just can't do it, physically," said Parrish, who received a
$31,000 salary and said he was chronically overworked. "You've got to
put out the hottest fires and there was a lot of stuff that slipped
through the cracks because no one was looking."
The imbalance between drilling growth and regulatory staffing levels
could become a crucial factor as lawmakers and the public weigh how
much environmental damage to expect in exchange for the benefits
brought by the drilling boom. Thanks in large part to advances in
drilling technology, estimates for the amount of natural gas held
underneath parts of the United States have increased by 35 percent
since 2007 and are now believed to be plentiful enough to meet the
nation's needs for more than 100 years. As a result, drilling is
expanding rapidly, including in the Marcellus Shale, the layer of rock
that stretches from central New York, underneath West Virginia to
Tennessee.
The boom, however, has brought complaints of water and air pollution.
Modern gas drilling in particular has drawn scrutiny because it relies
on hydraulic fracturing, a process that injects millions of gallons of
chemically infused water underground and produces large volumes of
waste. The industry has fended off efforts to establish stricter
regulations in part with its argument that the current state oversight
is effective.
What it takes to enforce regulations, and whether authorities have
enough resources to get the job done, are questions that rarely enter
the debate.
"Not having eyeballs on the ground is horrendous," said Jim Baca, who
served during the Clinton administration as director of the U.S. Bureau
of Land Management, the federal agency that oversees more than 85,000
oil and gas wells on federal land. "If you don't enforce the law, the
industry will do whatever they think they can get away with."
Spokesmen for state and federal regulatory agencies defend their
effectiveness and caution that the picture is more nuanced than
mathematical equations can convey.
They say that they are working to improve efficiency in their
departments and that the number of inspectors alone doesn't always
reflect enforcement because staffers can be shifted to meet urgent
priorities. Employees might have capacity in their workload to absorb
much of the growth in drilling that is taking place, they say.
"They may have to work a little harder," said Stuart Gruskin, New
York's executive deputy commissioner for environmental conservation,
about staffing in his state.
"It's like any other business. You can adjust from a management
perspective how you utilize your resources until you reach the point
where you are not doing a good enough job."
The New York State public employees union disagrees. "Attempting to
have them do even more with less is not possible," it said this week in
a statement calling for delaying the expansion of drilling for at least
a year because of, among other things, what it called understaffing at
the Department of Environmental Conservation and other state agencies.
The Lone Star Record
No state has more drilling than Texas, which has 273,660 wells and
just 106 regulators to oversee them.
As in most states, regulators for the Railroad Commission of Texas, the
agency that is charged with oil and gas regulation, are kept busy by a
broad range of responsibilities. They police gas wells, oil wells,
waste injection wells, disposal pits, compressor stations and access
roads. The wells can be spread across hundreds of miles, sometimes
peppered throughout difficult-to-access terrain, with limited cell
phone or computer access, heavy rains and rough roads requiring
four-wheel drive.
Regulators also approve new permits -- and try to do it fast enough to
not saddle the companies applying for them with extra costs. They visit
new wells several times during construction and old wells before they
are shut in, or sealed. They are obligated to quickly respond to all
complaints, which can range from an unauthorized flaring of emissions
or gases to a spill of hazardous fluids.
Eighty-three of Texas' regulatory staffers conduct field inspections,
according to the commission, meaning each person is responsible for
almost 3,300 wells, many of them requiring several visits in a year.
As in West Virginia, keeping up with the workload is nearly impossible.
"It's one of the worst-kept secrets around the state that the wells
that are ostensibly checked once a year aren't," said Jeff Weems, a
Houston attorney who specializes in the energy industry and is running
for the top job at the Texas Railroad Commission. "They could double
the number of inspectors and still be straining their staff to do their
job."
In late 2007, a Texas state auditor's report (see
http://s3.amazonaws.com/propublica/assets/natural_gas/texas_railroad_commission_auditor_report_aug2007.pdf)
examined the Railroad Commission's enforcement record and found that
nearly half of the state's wells hadn't been inspected in the five
years between 2001 and 2006, when the data was collected. (It also said
regulators' routine acceptance of gifts from the companies they police
raised questions about their objectivity and conflicts of interest, and
the commission imposed a $50 limit on gifts as a result.)
In Texas, as in most states, regulators prioritize their work to make
sure the most essential inspections get done. Complaints and spills top
the list, along with new well construction.
But the Texas auditor's report found that 30 percent of all spills were
inspected "either late or not at all."
"It is quite clear to management that inspecting 100 percent of these
notices ... is not possible with current resources," the Railroad
Commission wrote in its response to the audit. "To the extent resources
become available in future legislative sessions, the Commission could
witness more activities."
A spokeswoman for the commission said its workload decreased when
drilling activity slowed in 2008, so the staffing situation has
improved. She said the agency conducted 128,270 inspections in 2009,
and visits every site it deems essential.
"Texas has maintained and will continue to maintain a strong
enforcement effort for our environmental rules, regulations and
policies," the spokeswoman, Stacie Fowler, said in an e-mail.
But the commission's Web site also makes clear that facilitating energy
production is a priority and the state won't slow drilling while
inspections catch up. It advertises the current waiting period for
approval of new drilling permits: three days.
According to ProPublica's analysis, the number of new wells drilled
each year in Texas has jumped 75 percent since 2003. However, staffing
increased just 5 percent during that period and enforcement actions
increased only 6 percent.
Records show that the Railroad Commission's budget for monitoring and
inspections has decreased 10 percent since 2005. Fowler said the agency
had requested more staffing from the state legislature at least three
times in the last five years and been turned down every time.
From the industry's view, the paucity of enforcement staffing sometimes
means it is up to the drilling companies to follow the rules as best
they can.
"I never saw a Railroad Commissioner on one of the sites," said Dale
Henry, a hydraulic fracturing expert who worked in Texas for the global
services company Schlumberger for several decades. Henry said companies
abided by the law whether regulators were there or not, but he also
said the normal work schedule meant that they often avoided regulators.
Inspectors worked 7 a.m. to 5 p.m. weekdays, and "all the work in the
field is done by operators between 5 p.m. and 6 a.m. and on weekends."
A Schlumberger spokesman said that the company works closely with
regulators and that it is the nature of the process to work through the
night.
Even when regulators do inspect problematic sites, the oversight can be
patchy.
In September 2007, a field inspector working in the Barnett Shale
outside of Fort Worth made a routine stop at an underground injection
disposal well site. His formal report found no problems and stated:
"Well area clean."
On their second visit two months later, inspectors found several
violations, including dikes that did not meet the facility's holding
capacity. Inspectors returned 61 days later after a resident complained
of spilled oil, overflowing dikes and green-colored fluid in standing
puddles. According to their report, they found that "oil-stained soil"
had seeped several inches into the ground around a large tank, that the
"containment dike will not hold estimated capacity" and that standing
rainwater had oil in it.
When asked about the discrepancy, Fowler, the Railroad Commission
spokeswoman, said conditions can change at a site on a daily basis. But
Fowler did not address perhaps the most remarkable finding in the
inspectors' repor: State records showed that the well site was not
being used, when in fact it was actively being injected with hazardous
waste.
"We looked at some records and found that the well was never
technically shut in," said Charles Morris, the now-retired inspector
who wrote the second report about the troubled well. "That happens all
the time in the field, too. I hate to say it, but the commission,
sometimes their record keeping is not what it should be."
Part of a Pattern
Texas' staffing challenges match a pattern across the states where
drilling is most active.
The number of new wells drilled in West Virginia increased 53 percent
from 2003 to 2008. Since 2003 its regulatory staffing increased 20
percent.
Enforcement actions, meanwhile, remained relatively constant, though
they temporarily dropped by more than half during a peak in drilling in
2007.
North Dakota saw a 987 percent increase in new wells drilled each year
since 2003, but took 13 percent fewer enforcement actions, even though
it added five regulators.
In Ohio, where the number of new wells drilled each year doubled
between 2003 and 2008, four new staffers were hired but the number of
formal actions dropped 33 percent.
Not every state saw a drop in enforcement actions.
In Pennsylvania, a state with intensive new Marcellus Shale drilling,
state regulators doubled their enforcement staffing last year. Between
2003 and 2009 enforcement actions increased by 60 percent.
Of the 21 states that supplied data on their enforcement actions, five
substantially increased those actions even as their staff-to-well ratio
lagged. In Louisiana, for example, staffing was flat or falling until
2007, when more inspectors were hired and enforcement actions began
shooting up. As a result, the state took almost twice as many
enforcement actions between 2003 and 2008, even though the overall
staff growth was just 3 percent and the number of new wells drilled
annually more than doubled.
The federal government, which separately regulates a large proportion
of the drilling on federal land in Western states, is also struggling
to police its territory. It has seen a 31 percent increase in drilling
since 2003.
A 2005 report from the U.S. Government Accountability Office said that
the Bureau of Land Management's ability to meet its obligations had
been lessened by intense growth, and that "staff had to devote
increased time to processing drilling permits, leaving less time for
mitigation activities, such as environmental inspections."
The agency has significantly expanded its staffing since then. But even
so, a 2009 analysis of its enforcement activity by the Western
Organization of Resource Councils, a group of environmental
organizations, found that the agency issued fewer enforcement actions
in 2007, the last year for which data was available, than it did in
1999.
The analysis, which focused on BLM enforcement and inspection in five
Western states, found that BLM inspectors spent a third less time on
environmental inspections and completed only 15 percent of the
highest-priority inspections. In Farmington, N.M., for example, BLM
inspectors completed just 82 of 1,257 high-priority inspections. In
Buffalo, Wyo., they finished just 136 of 3,527 red-flag jobs, according
to a federal database.
"If you ask any BLM staff who has been dealing with the oil and gas
industry, they admit they don't have the staff do deal with this. It
hasn't been a priority," said Daniel Patterson, an Arizona state
representative and southwest regional director for the group Public
Employees for Environmental Responsibility, which works to convey
confidential views of its government employee members. "It's pretty
much up to the operator to decide if they are going to operate legally
or if they are going to cut corners that lead to more pollution. That's
a problem."
State and federal regulatory officials say that there is no such thing
as a proper ratio of enforcement actions to wells, and that there is no
way to measure how effective informal warnings between inspectors and
operators are as a deterrent. Such warnings are not recorded in
regulators' statistics. They also say there are myriad ways to increase
the effectiveness of their oversight, including investing in new
technology that improves efficiency and writing stronger laws.
Colorado, which has seen a 149 percent increase in the number of wells
drilled each year since 2003, is one state that has done both.
In 2006 the state hired several new inspectors and began computerizing
its records and equipping field regulators with laptops full of
everything from well histories to violations. In April the state
instituted new drilling regulations that are widely seen as some of the
toughest in the country.
"We now have more prescriptive rules and policies, which will help to
prevent problems that could otherwise evolve into violations triggering
the need for enforcement," said David Neslin, director of the Colorado
Oil and Gas Conservation Commission.
Whether that is enough to do the job remains to be seen. One new hire
is Chuck Browning, who came on eight months ago as a field inspector
for the northwest part of the state and said the magnitude of the job
can be overwhelming. With two other inspectors, Browning shares
responsibility for some 25,000 wells. He bounces back and forth between
the Utah and Wyoming borders, tallying 17,000 miles on his Trailblazer
since March.
"I'm off in some far-flung remote area of the country side and there's
thousands of wells around me," said Browning, a former geologist who
has worked in the oil industry for 20 years. "I just pick my way out of
the woods knocking them out as best I can."
Not long ago, Browning was wandering through the Rangely field -- an
eight-mile wide swath of oil, gas and injection wells that stick up out
of the brown arid plain of Northern Colorado like candles in a cake --
when he stumbled on an unmarked open pipe jutting out of the dirt. Gas
fumes wavered six inches in the air and when Browning dropped a pebble
into the hole, he heard a kurplunk as it struck liquid. Abandoned wells
are supposed to be capped and dry -- but this one was about to overflow.
In his truck he fired up his laptop, accessing topographic maps,
records and aerial photos of some 88,000 wells across the state,
searching for this one. But it didn't appear anywhere.
"I still absolutely have no idea how many wells are up in Rangely. It's
well over 1,000," he said. "This one is definitely a potential hazard."
It was the kind of puzzle that can take a day to sort through, and at
least another day to bring in the equipment and crews to begin to take
care of the abandoned well. It's a wild card that can play havoc with
the 10-wells-per-day inspection schedule Browning and so many other
regulators are forced to keep.
New York State
If Texas and Colorado -- the first- and eighth-ranked states in
the country for number of natural gas wells -- can provide a lesson,
states like New York may have the most to learn.
New York, which sits atop the Marcellus Shale, has found itself at the
epicenter of the nation's drilling boom and the epicenter of the debate
over drilling's effect on the environment. The state's relatively small
oil and gas division currently oversees some 13,684 wells, but it is
under intense pressure from drilling companies, which would like to see
thousands more wells drilled.
Chesapeake Energy, one of the nation's largest natural gas companies,
has gobbled up more than a half a million acres of land leases in New
York, and earlier this month Exxon said it would pay $31 billion for
XTO Energy, a gas company that also holds extensive rights to drill in
Pennsylvania and West Virginia's Marcellus Shale.
The state has delayed that development, however, to study the
environmental consequences of hydraulic fracturing and investigate a
chorus of objections from people who fear that drilling will
contaminate drinking water. Just last week New York City called for a
ban on drilling inside its watershed, citing a consultant's report that
said it could jeopardize the drinking water for nine million residents.
At the same time, however, Gov. David Paterson, reeling from one of the
worst state financial shortfalls in the nation, has made gas
development a cornerstone of his draft energy plan.
New York regulators say that they have a better environmental record
than most states when it comes to regulating oil and gas, and that a
suite of proposed rules will put the state's drilling laws on par with
Colorado's. Yet New York is the only state examined by ProPublica that
has cut its regulatory staffing in recent years. Since 2003 New York's
Department of Environmental Conservation has reduced its oil and gas
division field inspector staffing by 20 percent (its overall
enforcement-related staff, when including management and office
positions, dropped 10 percent), stoking concerns that when the drilling
kicks into high gear, the state will suffer the same sort of problems
that have plagued West Virginia and Texas.
Gruskin, the New York DEC's executive deputy commissioner, says that
the agency is committed to good oversight and that energy companies
that want to drill in New York will simply have to adapt to the
agency's pace.
"It's going to go slow. Very slow," he said. "If we only have a certain
number of inspectors available in that region, people are going to have
to wait until they are available. And that's just reality, that's the
way it's going to be.”
But Gruskin's promise not to let drilling outpace his headcount doesn't
match the recent past. Even as the regulatory staffing was being
reduced, the DEC allowed a 676 percent increase in new wells drilled
each year, a statistic that makes New York one of the fastest-growing
drilling states in the nation. Meanwhile, the state's 16 field
inspectors took only three more enforcement actions against drilling
companies in 2008 than they did in 2003.
If the flat enforcement statistics were a problem, Gruskin said, the
number of spills and environmental problems would have gone up --
something he points out hasn't happened.
And unless it does, the state appears content to play chicken.
"I don't think the industry believes that our resources have become so
thin that they are not going to get caught." Gruskin said. "There are a
lot of eyes on what is going on."
ProPublica reporter Sabrina Shankman contributed to this report. So did
ProPublica's director of research Lisa Schwartz and researcher Kitty
Bennett.
Write to Abrahm Lustgarten at Abrahm.Lustgarten@propublica.org